Every Business Has a $27,000 Water Cooler: A Business Expense Audit

Every business has its own version of my $27,000 water cooler.

That's my estimate of what I've spent above what I likely would have paid for the same water service over the past 15 years—not on the water itself, but by paying materially more than I do today. It was a silent leak.

I missed it because it was...water.

Not payroll.

Not insurance.

Not a major piece of machinery.

Just water.

Halfway through every year I have a habit of looking at our income statement and mentally doubling every expense line to estimate our annual spend.

For some reason, this year I stopped at one line:

Drinking Water: $1,560

"Wait...we're on pace to spend over $3,000 this year on drinking water?"

That simple question sent me down a rabbit hole...

What started as a simple question turned into an unexpected business expense audit—one that uncovered a recurring cost I hadn't questioned in more than 15 years.

The PAVERART Water Cooler: Money Pit, and forever a reminder....

My wife Kim manages our books and a hundred other things. I ask a few questions:

• Do you know what we pay for water?

• Are we paying market price?

• Those 2 coolers, I assume we own them right?

  
  

We turn to Google and ask about 5 gallon bottle of water delivery service in south NJ. One of my most trusted brands comes up, COSTCO. About $8 per bottle, delivered by? Primo Brands. Interesting.

Now we pull our own invoices.

• We ALSO use Primo.

• We pay a $20/month rental fee for our cooler.

• We pay $17 per bottle. 2x+ COSTCO. And after a quick scan, substantially more than alternatives in my area.

  
  

So I called Primo.

After 15 minutes on hold, a customer service rep pulled up our account. Now the fun begins.

How long have I been paying the $20/month rental fee?

Since 2011! 15 years!!!

Over $3,600 in rental/service fees for a water dispenser I can buy for less than $150 one time. To be fair, the rep said this was not a financing program, it was a service agreement where they would replace it free of charge should something go wrong. And we DID replace one about 7 years in. That made me feel better. Not really!

So what was the outcome when I brought both of these up, the 2x cost per water bottle and the crazy rental fee?

They eliminated the rental fee.

They put my Costco member # in and immediately cut the price in half. Just like that.

No "back credit" or compensation for a 15+ year customer. That is certainly their right.

I don't know whether Primo should have proactively told me about Costco pricing. Reasonable people can disagree on that. But I do think businesses should occasionally ask themselves a hard question:

Are we comfortable with long-term customers paying materially more simply because they haven't thought to ask? Could the reputational cost outweigh the additional revenue?

What I do know is this:

I considered myself a pretty disciplined business owner. I negotiate six-figure contracts. I scrutinize capital investments. Yet I let one tiny recurring expense run on autopilot for 15 years without ever asking whether I was paying a competitive price.

That's the lesson.

The biggest lesson from this expense audit wasn't about water. It was realizing that recurring expenses are often the easiest costs to ignore because they've become routine.

Every business probably has its own "$27,000 water cooler." Expenses that you may need, but have not questioned in years.

Mine just happened to dispense water.

So let me ask you.....what's your version of the $27k water cooler?